Markets to hold ahead of Fed announcement

HA NOI (VNS) — The market is expected to move sideways early this week as it awaits a mid-week "market watch" decision by the US Federal Reserve (Fed) regarding a possible interest rate hike.

"Investors appear to be standing outside and waiting for the Fed's move, instead of strongly investing in the market at this stage," analysts at BIDV Securities Co wrote in a report, mentioning the market's current low liquidity and narrow trading band.

They further said that whether or not the US Fed raises interest rates in September, the result would cause market volatility, in the short run. Therefore, the "current value accumulation will likely end soon when the Federal Open Market Committee's meeting takes place from September 16-17".

Shares rose in two out of the total five trading days last week, mainly driven by large-cap stocks.

On the HCM Stock Exchange, the VN-Index gained a cumulative 1.78 per cent during the week, closing Friday at 566.74 points. Meanwhile, the HNX-Index on the Ha Noi Stock Exchange increased 1.59 per cent to end the week at 77.53 points.

Blue chips were the largest gainers last week. The VS-Large Cap, the index measuring performance of the largest stocks with a market capitalisation of over VND10 trillion (US$444.4 million), developed by the financial website vietstock.vn, climbed 4.12 per cent.

Other indices, including VS-Mid Cap, VS-Small Cap and VS-Micro cap. increased just 0.5-1.3 per cent.

Liquidity continued to decline from the previous week.

In HCM City, the daily trading volume dropped 9 per cent from a week ago, averaging only 87.5 million shares, valued at over VND1.5 trillion ($66.7 million) per session. These figures were low, compared with the last three-month average of 135 million shares and VND2.3 trillion ($102.2 million).

The similar number was much more modest in Ha Noi, as the market volume reached just 33 million shares, worth VND367 billion ($16.3 million) per session.

According to data on the vietstock.vn, 14 of 20 sectors saw gains, of which banks were on top with an average growth of 7.73 per cent. Insurers were the second largest gainers, with an average rise of 4.62 per cent, followed by real estate, construction and securities companies, with increases from 1.7-2.2 per cent.

Bank for Investment and Development of Viet Nam (BID) was the second largest listed lender by market capitalisation, with over VND77 trillion ($3.4 billion) on September 11, becoming the leading lender. Its share value gained almost 9 per cent last week, thanks to information that the share was included in the FTSE Vietnam Index and FTSE Vietnam All-Share Index, managed by the FTSE Vietnam exchange-traded fund in its third-quarter review.

Its liquidity also improved, with an average of over 2.6 million shares traded per day, higher than the previous week's average of just 1.7 million shares per day.

According to analysts at Bao Viet Securities Co, investment capital in shares will be segmented in the short run, based on third-quarter business results of listed companies. They said those benefiting from lower input costs, thanks to declines in global commodity prices, include steel, iron ore, plastic, oil and foreign currency, which could attract higher attention. — VNS